Last week we talked about tax rates, setting aside money for tax and ACC and the basics of claiming GST. This week we will be looking more in depth at what expenses you can claim and business assets
What can I claim?
You can claim most expenses that are directly related to your business if they are expenses you have that you would not normally have incurred if you weren’t in business.
Can I claim home expenses?
If you do not have a specified office that you pay rent on and you operate your business from home, you can claim up to 25% of all your home expenses. E.g. home power, rates, phone, mortgage interest/rent, insurance, repairs and maintenance. You need to work out the percentage use of your home office and Ezebiz Accountants can help you do that.
Can I claim my vehicle expenses?
If you only use your vehicle for business, you can claim 100% of all your vehicle running costs and expenses.
If you use your vehicle for less that 5,000 business kilometres per year, you can keep a record of your business travel throughout the year and your accountant will claim this on a per kilometre basis when they prepare your end of year accounts, or you can keep a log book of all your travel (personal and business) for 3 months to determine the percentage of business versus personal use of your vehicle. You will be able to claim that percentage of all fuel, insurance and repair & maintenance costs of your vehicle each year.
A log book will need to be done every three years for three months, or if you think your vehicle usage for business has changed.
If I have to borrow money for my business, can I claim the loan payments?
If the money you have borrowed is purely for the purpose of running your business, then you can claim the interest portion only as an expense. The principal that you pay on your loan is not a tax deductible expense. If you have bought something that is only a percentage business use, then you can only claim the percentage business portion.
What happens if I have to buy assets for my business? E.g. a new computer, new vehicle, new machine?
If the asset you have purchased is under $500 (including GST) then the whole amount is deductible as a business expense.
If the asset is more than $500 (including GST) then it will be added to your balance sheet/assets and only a portion of it will be deductible as depreciation each year. Your accountant will be able to give you more information on how much is deductible each year.
Next week, we will look at paying expenses and cash payments.
Once again, keep in mind that we are only a quick email or phone call away so you can book your FREE consultation with us – 07 308 5576
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